Connecticut 1099-G: What It Means for Your Taxes
Navigate the tax implications of a Connecticut 1099-G. Understand how federal and state rules differ for unemployment and state tax refund income.
Form 1099-G, Certain Government Payments, is an informational document issued by federal, state, or local governments. It serves to report specific payments made to individuals during the year. This form is not a bill, but rather a tool used for preparing your annual income tax returns. Receipt of this form indicates you received money from a government entity that may need to be reported to the Internal Revenue Service (IRS).
Understanding Your Connecticut 1099-G
In Connecticut, you will receive a Form 1099-G for one of two primary reasons. The Connecticut Department of Labor (CTDOL) issues the form to report unemployment compensation you received. The form will detail the total amount of benefits paid to you in Box 1.
The Connecticut Department of Revenue Services (DRS) issues a different 1099-G for state income tax refunds. You will receive this version of the form if you itemized your deductions on your federal income tax return for the year in which the refund was issued.
Taxability of 1099-G Income
The tax treatment of the amounts reported on your Connecticut 1099-G differs between your federal and state returns. It is important to understand these distinctions to correctly calculate your tax liability. The specific rules depend on the type of payment you received.
Federal Taxability
At the federal level, any unemployment benefits you receive are considered taxable income. The total amount from Box 1 of your CTDOL-issued 1099-G must be included in your gross income on your federal tax return. You may have chosen to have federal income tax withheld from these payments, which would be shown in Box 4 of the form.
The taxability of a state income tax refund depends on your prior-year federal return. The refund is only considered taxable income if you itemized deductions on the prior year’s Form 1040 and you received a tax benefit from deducting the state income taxes you paid. If you took the standard deduction, your Connecticut refund is not taxable on your federal return.
Connecticut State Taxability
For your Connecticut state income tax return, unemployment compensation is also fully taxable. You must include the full amount of unemployment benefits in your Connecticut income. You may elect to have taxes withheld from these payments, which includes both a 10% federal withholding and a 3% state withholding.
A difference arises with state tax refunds. The Connecticut state income tax refund reported on a 1099-G from the DRS is not taxable on your Connecticut state return. Including this amount in your state income would be equivalent to the state taxing a refund of its own tax, so you are allowed to subtract this amount from your income on your state return.
How to Report 1099-G Income on Your Tax Returns
Properly reporting the figures from your Form 1099-G requires placing them on the correct lines of your federal and state tax forms. For federal purposes, unemployment compensation is reported on Schedule 1 of Form 1040, “Additional Income and Adjustments to Income.” The total from Box 1 of your 1099-G is entered here, which then carries to the main Form 1040. If your state tax refund is taxable, it is also reported on Schedule 1 as a “Taxable refund, credit, or offset of state and local income taxes.”
On your Connecticut return, Form CT-1040, you will also report the full amount of your unemployment compensation. However, to avoid being taxed on your state refund, you must make a specific adjustment. You will subtract the amount of your taxable state income tax refund on Schedule 1 of Form CT-1040, which ensures it is removed from your Connecticut taxable income.
Addressing Discrepancies and Issues
If you find an error on your Form 1099-G, it is important to contact the correct issuing agency. For any issues related to unemployment benefits, such as an incorrect amount shown in Box 1, you must contact the Connecticut Department of Labor directly. For discrepancies with a state tax refund 1099-G, you should reach out to the Connecticut Department of Revenue Services.
Receiving a 1099-G for unemployment benefits you never applied for or received is a sign of identity theft. In this situation, you should immediately report the fraud to the CTDOL. They can then issue a corrected Form 1099-G showing zero income, which you will need to file your taxes accurately. If you did not receive your form, you can access it online through the CTDOL’s ReEmployCT portal for unemployment or the DRS’s myconneCT portal for tax refunds.